Moody's cuts Avery Dennison, rates notes Baa1

Moody's Investors Service said it lowered the senior unsecured debt ratings of Avery Dennison Corp. to Baa1 from A3 and assigned Baa1 ratings to a proposed $250 million senior note issue of ADOP Co.

The ratings remain under review for further downgrade. Moody's also affirmed Avery's short-term rating for commercial paper at Prime-2.

The review reflects the unspecified structure of the remaining long-term financing for the Paxar acquisition, according to the agency.

The current Baa1 ratings are based on an assumption that Avery will issue both a term debt security and a hybrid security by the end of October, Moody's said, to further reduce outstanding commercial paper borrowing used to fund the June 15 purchase of the Paxar Corp. for $1.34 billion. Avery's Baa1 ratings also incorporate the high cash price paid for the acquisition of Paxar, the agency said.

The negative outlook reflects the potential challenges management faces in achieving proposed synergies from the Paxar acquisition, Moody's said.

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